India insurance giant to focus on ‘takaful’ to boost Mena growth

India’s General Insurance Corp (GIC Re), the 15th largest re-insurer in the world, is planning to convert its Dubai office into a subsidiary as part of strengthening the Middle East and North Africa (Mena) business from which it generated premium worth $385mn.

The public sector re-insurance giant is also focusing more on life and Islamic ‘takaful’ in a big way to make its presence felt in the Mena region, P K Bhagat, general manager of GIC Re, told Gulf Times on the sidelines of seventh MultaQa conference, which concluded yesterday.

“We might consider converting Dubai office into a subsidiary in the next few years as part of strengthening the operations in the Mena region,” he said.

As a prelude to it, the office, which earlier catered only to the GCC (Gulf Cooperation Council) but later extended to serve the wider Mena region, would be strengthened by deputing more officials from its head office in Mumbai.

Asked when it would happen, Bhagat said it might take time since all aspects have to be examined, legally or otherwise.

GIC Re had reported about 11% growth in premiums from Dubai operations to $385mn in 2011-12. Its total premium income was $2.52bn during the same period.

Although specialist underwriting such as in aviation is being done in India, he said the Dubai office has been given mandate to underwrite “certain” classes of businesses.

GIC Re work with an agency network in the GCC and wider Mena region, “so we are asking our agents to employ more skilled persons, underwriters and claims professionals to make the business efficient,” he said.

Shrinking premiums in the domestic market due to substantial reduction in compulsory cession have led GIC Re to go overseas. Accordingly it started an office in Dubai in 2007.

A panel of India’s Insurance Regulatory and Development Authority recently suggested halving of the compulsory reinsurance that Indian companies should place with GIC Re.

“In the last seven years, overseas premium account for 45% of our total premiums,” Bhagat said, adding there are good prospects in doing business in the region. GIC Re already has an office in Malaysia through which it underwrites Islamic takaful business, an area in which it is giving more thrust in the Mena region.

“We opened a takaful window in Dubai office but it is not writing much and the growth has not been what we had thought of,” he said, adding this is an area GIC Re would be focusing in the coming years.

GIC Re takaful operations are part of the company’s overall reinsurance business and have been structured progressively, and at times retrospectively, in accordance with Shariah requirements.

GIC Re is looking at personal lines, health insurance and oil and gas sectors, according to him.

“Life is an area we should be concentrating more because we hardly write any business. It is very miniscule. This is an area we feel that we can grow further not only domestically but also in the Middle East,” he said, adding “we shall be focusing on expatriate population as far as life part is concerned”.

GIC Re is also planning to open representative offices in Bangladesh, Sri Lanka, Nepal, South Africa and Brazil.